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Urban-rural integration to fuel socioeconomic development

YAO SHUJIE | 2021-06-03 | Hits:
(Chinese Social Sciences Today)

A public security staff member handles cross-provincial household registration for residents at the Government Service Center of Huainan City, east China’s Anhui Province, in March 2021. Photo: CFP

China’s 14th Five-Year Plan (2021-2025) for National Economic and Social Development and the Long-Range Objectives through the Year 2035 underlines the importance of improving the integrated urban-rural development mechanism. Promoting effective integration of rural construction and urbanization is of great significance to advancing the modernization of agriculture and rural areas, and enhancing the driving force and resilience of social and economic development to make it sustainable. 
Right time for China
The academic mechanism for urban-rural integration, or integrated urban-rural development, can be traced back to the “dual economy” theory put forward by renowned British development economist Arthur Lewis in the 1960s. This theory splits the social economy into modern industry and traditional agriculture. There is a vast gap between the two sectors in terms of productivity. The transfer of agricultural labor to modern industry will continuously boost labor productivity and per capita income. Based on this theory, if all surplus agricultural labor is transferred, urbanization, industrialization, and social modernization are basically accomplished. 
Looking back at the past more than four decades of reform and opening up in China, rapid urbanization and industrialization have moved great quantities of surplus agricultural labor to non-agricultural sectors and cities, spurring the economy to grow at consistently high rates for a long period of time. 
However, the urbanization rate of household registered populations is only 45%, while the urbanization rate of permanent residents stands at 60%. The disparity between the two rates indicates that urbanization and industrialization in China have not yet reached the so-called Lewis Turning Point, and that China’s urbanization and industrial model differs from the traditional dual economy model. 
In China’s dual economy model, agricultural labor productivity rises amid industrialization, instead of remaining constant as presumed by Lewis. The Chinese model is also distinct as the household registration system and rural land policies impact farmers’ interests in migrating to and settling down in cities. In other words, urbanization in China does not entirely depend on the market, but is also subject to current institutional arrangements. 
As the Chinese economy has entered the new normal, particularly after the per capita GDP exceeded $10,000, the pressure for continued per capita income growth keeps mounting. The original extensive growth model, which relies heavily on the labor force, especially domestic migrant workers, to drive urban economic and industrial development, is difficult to sustain. 
Further economic growth calls for efforts to reach out from cities to the vast countryside, fully capitalizing on rural land, labor, and other natural resources to provide high-quality urbanization and industrialization with vast room for development and maneuverability.
Therefore, integrating the development of urban and rural areas, and narrowing the gap between the two sides will play an essential role in raising rural people’s consistently low incomes and powering sustainable high-quality development of the national economy. 
In 2020, China eradicated extreme poverty, accomplishing the UN sustainable development goal of ending poverty in all forms 10 years in advance, and contributing Chinese wisdom and solutions to the global anti-poverty fight. To consolidate and extend poverty alleviation achievements, and ensure that sustained national economic growth creates more benefits for low-income farmers in less developed areas, China’s pro-poor policy will not change in the upcoming five years and perhaps for an even longer period of time. 
Poverty alleviation and development in rural areas has not ended. It has entered a more complicated and challenging stage based on higher levels and quality. In the new era, the focus of alleviating poverty and helping the disadvantaged will be shifted from eradicating absolute poverty to reducing relative poverty, and from ending material poverty to eliminating intellectual and cultural poverty. Meanwhile, low-income groups’ income growth should be no slower than the national per-capita income growth, and special attention should be paid to integrated urban-rural development to bridge the income gap between urban and rural areas, thus realizing balanced development and common prosperity nationwide. 
Integrated urban-rural development faces institutional obstacles, barriers obstructing factor flow, and barriers to farmers’ decision to become urban residents. 
In urban areas, the long-standing household registration system and administrative division policies have been effective in promoting orderly population flow and preventing farmers from entering cities without careful consideration. Over more than 40 years of urbanization, the number and scale of Chinese cities grew quickly. 
In the countryside, agricultural production is an important guarantee of rural residents’ subsistence. Land reforms in the early 1950s granted Chinese farmers the rights of land use and management, allowing rural households to reasonably divide labor between agricultural production and seeking employment in cities, in order to maximize family incomes. 
If rural migrant workers have difficulties in cities, it is a backup option to return to their hometowns and reassume their farming roles, so that they would not be stranded in cities struggling to make ends meet after losing their jobs. 
To some extent, agricultural production, rural land, and housing are vital supplements and subsistence insurance for hundreds of millions of Chinese migrant workers, and also a crucial guarantee for long-term stable urbanization and industrialization in the nation. 
However, the advancement of urbanization and industrialization has multiplied job opportunities and continuously expanded living space. Returning to farming and life in the countryside has been less enticing to most migrant workers in recent years. Urban household registration restrictions and rural land policies have instead become institutional obstacles hindering integrated urban-rural development. 
The second challenge for urban-rural integration is the inefficient flow of rural land and other resource factors. Land policies are inseparable from the flow of rural labor. More and more rural labor and families are able to find stable jobs, buy their own houses and live a stable life in cities like urban people. The likelihood of unemployment and falling into poverty has been decreasing. 
Nonetheless, some people consider rural land and homesteads to be a kind of life insurance, so they still own a considerable amount of rural land and homesteads while living in cities. Consequently, rural land and homesteads are left idle for a long time, leading to the abnormal decoupling of land, labor, and capital, causing huge waste to land and other production resources, and impeding agricultural specialization, scaled expansion, and modernization. 
In addition, due to rapid industrialization and urbanization, the generation which transferred their employment and lives from the countryside into cities can hardly be freed from nostalgia. Hence some rural people unavoidably have difficulties deciding whether or not to settle down in cities given their personal preferences and traditional mindsets, which also represent a key obstacle to integrated urban-rural development. Some migrant workers and families that have worked and resided in cities are unwilling to uncouple from rural household registration, and give up their rural land and homesteads. Apart from nostalgia, social services in some cities are imbalanced, unfair, and inadequate, and rural migrant workers and their families don’t expect a safe and stable life in urban areas. 
Policy suggestions
According to the above analysis, efforts should be made in the following aspects to push ahead with high-quality integrated urban-rural development. 
First, full consideration should be given to future urbanization and population distributions in urban and rural areas on the basis of long-term development needs, to reasonably lay out industries and social services required by urbanization. 
In rural areas, it is necessary to formulate long-term regional plans regarding dynamic agricultural population sizes, land scale and usages, and to make scientific arrangements on agricultural production and environmental construction. Reserving land for grain and industrial crop production should be in sync with enlarging areas set aside for forestry, waters, and grasslands. While ensuring the security and quality of food and other agricultural products, the countryside should be built into cities’ backyards, as a defense wall for ecological conservation, and a reserve of high-quality livable places for both rural and urban residents. 
Second, measures should be taken to encourage farmers to move to and settle down in cities. Currently the majority of agricultural households base their production on the system of household contract responsibilities, a system implemented in early stages of reform and opening up. The production is small-scale and scattered. Some rural families have left the countryside, but retain their homesteads and small pieces of land which are now seriously idle. 
Across the nation, nearly 200 million migrant workers work and reside in cities permanently, but still maintain their rural housing and land. Policy interventions should encourage farmers to settle down in cities, and persuade migrant families (where conditions permit) to transfer the management and use rights of their rural homesteads and agricultural land.  
Last but not least, rural populations should be concentrated properly in geographically advantaged local counties, central towns, and villages. A scientific layout is essential for the construction of kindergartens, primary schools, secondary schools, vocational schools, and hospitals to upgrade rural education and medical care, and narrow social service gaps between urban and rural areas. Production factors should be facilitated to flow freely between urban and rural areas, so as to accelerate the integrated development of land, capital, and talent. 
On the national level, a hierarchical, organically integrated pattern specific to each region and city cluster should be established for the sake of urbanization and rural modernization, featuring national-level central cities, urban sub-centers, prefecture-level cities, counties and central towns, and natural villages from the top down. The aim is to maximize room for high-quality, sustainable socioeconomic development and lay a significant foundation for building the new development pattern which will smooth domestic circulation and let internal and external circulation reinforce each other. 
Yao Shujie is a professor of economics from the Faculty of Social Sciences at Chongqing University.